Insurance

5 Signs You May Be Underinsured – Life Happens

If you have dependents—or simply loved ones you want to take care of after you die—life insurance is very important. This coverage helps ensure that your lost income doesn’t translate into tangible material losses for your family after you’re gone.

But how much life insurance is enough? This is a question that can change significantly over the course of your life, and is an important question to get right.

You may be underinsured with life insurance coverage if…

1. Your only life insurance coverage is through your employer.

While some life insurance is certainly better than no life insurance, if your only coverage is through your employer, you may not have enough. These plans usually offer very limited coverage (like a year’s worth of your salary, maybe two), which isn’t enough to meet your family’s needs if you have significant debt or children who You are hoping to help fund your college education.

Additionally, life insurance offered by your employer is usually dependent on you keeping the job, so if you leave your position for any reason, the coverage disappears.

Finally, buying an individual policy gives you access to a variety of life insurance policies, including permanent life insurance, with living benefits that you can use while you’re alive.

2. Your income increased.

Getting an increase is almost always a good thing, but if you’re earning significantly more today than when you bought your life insurance policy, you may find yourself underinsured. More income usually comes with associated lifestyle changes, and learning to live on less is likely the last thing your loved one will want to do if you leave unexpectedly.

3. Your live-in spouse does not have life insurance.

If your stay-at-home spouse does not have life insurance coverage, you may want to consider getting them a policy. Even if they don’t make an income that needs to be replaced, they provide valuable services like childcare that would need to be paid for if they weren’t there.

Check out the real-life story of the Virgin family to see how important life insurance was to a family that, thankfully, insured stay-at-home mom Teresa. If not for the insurance, they believe they would have lost their home.

4. You had a child.

As every parent knows, having a child is expensive—in fact, in 2023, raising a child will cost An average of over $21,000 per year. (And that’s before you factor in college!)

All of this to say, if you’re a new parent or you’ve brought an extra child into your family, now is a good time to review your life insurance coverage and make sure you have coverage for your dependents. Sufficient to meet people’s long-term needs, including food, housing and education, until they are of age. Given the high cost of childcare (and the unusual financial position of an underinsured single parent), even one child can significantly increase your life insurance needs.

5. You bought a new house.

Paying off a mortgage is one of the most stressful financial needs for any family—and even more so for a newly widowed spouse. If you’ve bought a new home since you first got your life insurance policy, you may find that you need more coverage to make sure your loved one pays off that loan. Can pay successfully. After all, moving is never fun, especially during a tragic loss.

While determining how much life insurance coverage you need can feel overwhelming as your financial situation changes over time, it’s within your power to make sure you have enough coverage. are doing The Life Happens Life Insurance Needs Calculator is a great starting point for estimating how much coverage you need. A half hour of work today can translate into years of financial stability in the future.


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